Osama Nawab_ Photo street_ canva — Osama Nawab examines a fundamental question in development economics: how do firms, individuals, and governments respond to incentives, shocks, and the rules of the game? Photo: canva

12 May 2026 10:54

How Do Institutions and Incentives Shape Economic Behavior in Developing Countries?

On Tuesday May 26 Osama Nawab will hold a trial lecture on a prescribed topic and defend his thesis for the PhD degree at NHH.

Title of the thesis:

«Institutions, Behavior, and Economic Outcomes in Developing Countries»

Summary:

Osama Nawab examines a fundamental question in development economics: how do firms, individuals, and governments respond to incentives, shocks, and the rules of the game? Drawing on field experiments, large-scale administrative data, and online experiments, the three papers offer complementary insights into the behavioral and institutional foundations of economic development — with a particular focus on Tanzania.

The first paper investigates tax compliance, a persistent challenge in low-income countries. Working with the Tanzania Revenue Authority, Nawab studies a receipt-lottery intervention designed to incentivize consumers to demand official receipts at the point of sale, thereby improving VAT reporting. The results show that the intervention does improve compliance, but firms push back. When given the opportunity, businesses strategically reduce their voluntary compliance and issue unofficial receipts to circumvent the policy. This reveals important limits to third-party enforcement mechanisms in low-capacity tax systems.

The second paper turns to firm resilience during an unexpected crisis. Using population-wide electronic fiscal data from Tanzania, the candidate examines how firms fared during the COVID-19 pandemic. While large firms initially suffered sharper drops in sales, they proved far more resilient over time, surviving at higher rates and recovering more strongly than small firms. This points to the critical role of firm size and access to capital in buffering against macroeconomic shocks, with implications for how governments should design support programs during crises.

Balancing efficiency and equity in fisheries management

On Wednesday May 27 Mads Fjeld Wold will hold a trial lecture on a prescribed topic and defend his thesis for the PhD degree at NHH.

The third paper takes a different angle, asking whether democratic participation itself shapes moral behavior. In a controlled online experiment, he finds that voting in a fair referendum increases generosity toward strangers, while exposure to a corrupt voting process heightens honesty. Even minimal engagement with democratic institutions, it turns out, can meaningfully influence how people behave toward one another.

Together, the three papers paint a cohesive picture of how institutions — fiscal, economic, and political — shape the decisions of both firms and individuals in developing economies.